Net Income
Net Income is the “bottom line” and the last line in the income statement. It represents the amount of money that remains after accounting for all expenses.
Example
Revenue = $500
COGS = $200
OpEx = $200
D&A = $25
Interest = $25
Taxes = $25
Net Income = 500 - 200 - 200 - 25 - 25 - 25 = $25
💡 EBITDA is preferred to Net Income when valuing a business as the items below EBITDA (Interest, Taxes, D&A) are subject to change after an acquisition.
In the room
Net income is the handoff point between the three statements — it's the bottom of the income statement and the top of the cash flow statement, and it flows into retained earnings on the balance sheet. That linkage is the backbone of the "walk me through the three statements" question.